Unichain empowers UNI to mitigate the negative impact of MEV through a built-in MEV redistribution mechanism, fast confirmation time, and transparent transaction sorting rules, but it cannot completely eliminate MEV.
Written by: 0XNATALIE
Yesterday, Uniswap announced a partnership with Flashbots to launch Unichain, an Ethereum L2 designed specifically for DeFi. This is an Optimistic Rollup based on OP Stack that aims to solve some of the challenges facing DeFi. It is worth mentioning that Uniswap, Flashbots, and Optimism have all received investment support from Paradigm.
The current block time of Ethereum L1 is 12 seconds, and the slow transaction speed limits the user experience. In addition, the MEV problem also needs to be solved urgently. The existing block construction mechanism causes some participants to obtain unfair benefits by manipulating the transaction order, thereby reducing market efficiency. In response to these problems, Unichain launched a 1-second block time and 250-millisecond "Flashblocks", combined with a verifiable priority sorting mechanism and a trusted execution environment (TEE), which greatly improved the transaction speed, while increasing the transparency and fairness of transaction sorting, injecting new vitality into the Layer 2 DeFi ecosystem.
Unichain’s Technical Features
1. Verifiable Block Building
This is a new block building mechanism introduced by Unichain, implemented by Rollup-Boost. It aims to improve the transparency of transaction sorting on the blockchain, reduce unfair MEV extraction, and increase transaction processing speed. The basic idea is to use TEE to perform the block building process, providing a transparent and trusted sorting mechanism. Rollup-Boost is a verifiable block building platform developed by Flashbots to upgrade Rollup performance, which optimizes the block building process through TEE. Unichain is its first practical application case. Rollup-Boost is integrated on Unichain as a sidecar software, leveraging its technical features (such as fast confirmation and verifiable priority sorting of Flashblocks) to enhance Unichain's performance and user experience.
How verifiable block construction works:
Using TEE for block building: TEE is a hardware security technology that can perform computing tasks in an isolated environment, ensuring that the external environment cannot be tampered with or interfered with. In Unichain, block builders run in TEE to ensure that the building process is safe and reliable. TEE simulates transaction execution, detects whether any transaction will fail, and removes failed transactions, thereby preventing users from paying high fees for failed transactions.
Generate Flashblocks: Unichain generates a block every second and introduces a pre-confirmation mechanism, Flashblocks, which divides each block into four flash blocks (i.e., a pre-confirmation is generated every 250 milliseconds) and transmits them to the sequencer in real time. Users can get early confirmation before the transaction is officially packaged, preventing transaction rollbacks due to block reorganization and other reasons, and reducing additional costs caused by uncertainty. This mechanism speeds up transaction settlement and reduces the chance of MEV extraction.
Prioritization and Verifiability: Rollup-Boost provides a verifiable method for transaction ordering, enabling users to verify the order in which their transactions were executed in a block. By building blocks in a TEE, transaction prioritization can be transparently performed according to specific rules (such as priority fees paid), and verification proofs confirm that block construction complies with these rules. This mechanism not only prevents block builders from abusing their ordering power, but also internalizes MEV, i.e. setting rules (such as MEV taxes) to allocate a portion of MEV revenue to protocols or liquidity providers.
2. Unichain Validation Network
The Unichain Verification Network (UVN) addresses the risks inherent in a single sequencer architecture and accelerates the economic finality of blockchains through staking and distributed verification.
UVN consists of multiple nodes, each of which can independently verify the status of the block to ensure that all transaction records are legal and have not been tampered with. It can prevent the risk of conflicting blocks (Block Equivocation Risk) or invalid blocks (Invalid Block Risk) in a single sequencer, thereby enhancing the security of the network. Operators who become UVN verification nodes must stake UNI tokens on the Ethereum mainnet. The more nodes staked, the greater the weight they have and the more likely they are to become active verification nodes.
In addition, UVN provides a faster economic finality mechanism that reduces the potential delays caused by a single sequencer through multi-node parallel verification. Each verification node confirms the validity of the block during the verification cycle and publishes the verification information on the network to increase the credibility of the chain state. Once the block is verified, these transactions are considered to be irreversibly completed (ie, economic finality). The validator needs to verify the block and publish the notarization during each verification cycle, otherwise he will not receive the corresponding reward.
What does the community think of Unichain?
Ryan Watkins, co-founder of Syncracy Capital, put forward the view that "RollApps are FatApps", believing that the RollApp represented by Unichain has higher control and flexibility, similar to fat applications, with greater control and management capabilities over infrastructure, and can better control the value they create. He divided the application structure into three types and compared their control scope:
Standard Application: These applications only control application logic and application fees, and rely on blockchain infrastructure for execution, settlement, consensus, and data availability. The scope of control of the application is relatively small.
Smart Contract RollApp: Extends the functionality and control of applications through smart contracts, covering the execution level. Applications can manage their own execution logic and fees, but still rely on the consensus and data availability of the underlying blockchain (such as Ethereum).
Sovereign RollApp: These apps control almost every aspect (except data availability), are more independent from infrastructure, and offer greater customization, control, and functionality to users and developers.
Fenbushi Capital researcher Yuki pointed out that Unichain is not an app-chain designed for a specific application, but a general L2 solution with a built-in MEV redistribution mechanism. However, some customized mechanisms (such as hooks) are still needed to ensure that MEV revenue flows to specific target groups (such as users or liquidity providers).
Researcher Haotian believes that Uniswap’s launch of Unichain is not a departure from Ethereum, but rather a further promotion of the development of Ethereum’s L2 ecosystem. The current L2 ecosystem has not yet fully stimulated the vitality of DeFi, and Unichain will play a catalytic role in the expansion of the DeFi field. Unlike dYdX and MakerDAO, which choose completely independent architectures and consensus mechanisms, Unichain is based on OP Stack and still complies with Ethereum’s Rollup-Centric expansion strategy, while also giving the UNI token more functionality. Unichain will compete with other L2s, helping to enhance the vitality of the entire L2 market.
There are also some different opinions. For example, KOL sudo rm believes that the current expansion strategy ignores the solution of some core problems. L2 expands the processing capacity of the network, but the user's security problem has not been effectively solved. Instead of investing a lot of money in the development of L2, it is better to solve the most basic and fundamental problems in the Ethereum ecosystem, such as user security and anti-attack. KOL Temmy questioned the necessity of Uniswap launching Unichain and was confused about whether more L2 solutions were needed because he believed that the existing L2 was sufficient. Uniswap's doing this may lead to more liquidity fragmentation, and if other dApps follow suit, the situation may be worse than expected.
